Fall 2008 Vol. 32, No.

A Better
DeAl
twelve SuggeStionS
for the
new u.S. PreSiDent
Military Interventions • Counterterrorism •
Afghanistan • Pakistan • Iraq •
Iran • Turkey • Proliferation • Economy •
Energy • Education • Health

Asian Exchange: China and India Trade Lessons in Education and Health
—By Charles A. Goldman, Krishna B. Kumar, Ying Liu, Sai Ma, and Neeraj Sood
Get the Big Picture

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Editorial Board
Timothy Bonds, Cynthia Cook, Jeffrey
Hiday, James Hosek, James Kahan,
Iao Katagiri, Lindsey Kozberg, Kevin
McCarthy, Elizabeth McGlynn, K. Jack
Riley, Charlene Rohr, Shirley Ruhe,
Mary Vaiana, Martin Wachs

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Thomson, Robert C. Wright
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Message from the Editor

A Time to Move Quickly

The Flagship Magazine of the RAND Corporation

U.S.
Treasury Secretary Henry Fall 2008 Vol. 32, No. 3
Paulson voiced the anxiety of
the age when he announced 4 Letter
a $700-billion U-turn on November 12, abandon­ Embassy Row
ing a plan to purchase mortgage-backed securi­
ties from troubled banks and committing instead 5 News
to use the congressionally approved bailout • Responsive monopoly
money to inject capital directly into the banks by • Environmentalist army
acquiring equity stakes in them. The stock mar­ • Unsafe democracy
ket fell 411 points, or about 5 percent, that day.
“I will not issue an apology for changing the 8 RAND Then and Now
From Microdata to Megatrends
strategy when the facts change,” Paulson defended
The Continuing Legacy of the RAND Health Insurance
his decision. “We had to move quickly.”
Experiment
His shift in tack raised more questions than
answers. But Paulson had concluded that the
original bailout plan would not work. Some­
thing different had to be done. And fast. He
10 Asian Exchange
China and India Trade Lessons in Education and Health
By Charles A. Goldman, Krishna B. Kumar, Ying Liu, Sai Ma,
did not have the luxury to conduct a thorough and Neeraj Sood
analysis of competing alternatives. He had to
choose what he believed, if only in theory, to be
a better use of resources.
The RAND experts who, in our cover story,
14 COVER STORY
A Better Deal: Twelve Suggestions for
present their suggestions to the new U.S. presi­
the New U.S. President
—By James A. Thomson
dent find themselves in an analogous position.
They would be the first to acknowledge that Military Interventions: Shift the Balance to
their recommendations have not been subjected Civilian Activities—By Robert E. Hunter
to rigorous cost-benefit analyses. But they see Counterterrorism: Wage a Sustainable Campaign
current policies as being far from optimal. In —By Brian Michael Jenkins
many cases, something new must be attempted
Afghanistan: Finish the Job—By Seth G. Jones
without delay to make better use of the vast
amounts of money being spent. Pakistan: Put Institutions First—By C. Christine Fair
The RAND experts call for strategic shifts Iraq: Offer a New Vision—By Nora Bensahel, Edward
that they believe, if only in theory, will offer O’Connell, and David E. Thaler
America a better deal. They cannot assert what
Iran: Build a Constructive Relationship—By Keith
is the single most cost-effective way forward.
Crane, James Dobbins, and Clifford Grammich
But a sense of urgency propels them. If they
could speak in one voice, they might echo Secre­ Turkey: Strike a Balance—By Angel Rabasa and
tary Paulson: “We have to move quickly!” F. Stephen Larrabee
Proliferation: Prevent Nuclear Use, Deter Terrorist
—John Godges Acquisition—By David Ochmanek
Economy: Keep America Innovative—By Titus Galama
and James Hosek
Energy: Pursue a Range of Solutions—By Michael Toman
Education: Standardize the Goal, Customize the
Strategy—By Brian M. Stecher and Laura S. Hamilton
On the Cover
Supporters at Grant Park in Chicago cheer as they learn that Health: Use COMPARE for Better Policymaking
Barack Obama has been elected president of the United
States on November 4, 2008.
—By Elizabeth A. McGlynn and Jeff rey Wasserman
AP IMAGES/PABLO MARTINEZ MONSIVAIS

W W W . R A N D . O R G R A N D R E V I E W / F A L L 2 0 0 8 3
 Letter
Embassy Row
Jerrold Green’s article in the Summer 2008 issue [“The
Future of Diplomacy: Real Time or Real Estate?”]
reveals an ignorance of the role of diplomatic missions.
U.S. diplomats do not stay confined to their offices
all day long. They are out in meetings with the people
they need to know in order to
analyze trends and influence host
country policies.
Shuttling in “laptop” diplo-
mats from home offices accom-
plishes nothing. In my diplomatic
career in Africa, I spent more time
than I liked briefing the visiting
roving diplomats from Australia,
Sweden, and other countries that
did not have local embassies. They
had absolutely no relationships of
any use in their foreign policies.
All they could do was summarize
what they learned from resident
diplomats.
Jerrold Green replies:
I nowhere said that we should close or eliminate
embassies. What I did say is that we should endeavor
to make them smaller, less vulnerable, less expensive,
and more efficient.
I doubt that our embassy in Nouakchott, to use
Hank Cohen’s example, suffers from bloat, and thus it
would not be a good candidate for being downsized.
The same cannot be said for other embassies in other
parts of the world.
4 R A N D R e v i e w / F a l l 2 0 0 8
I imagine Mauritania in northwest Africa would be
one of the first candidates for “distance diplomacy.” That
country has had attacks from Islamic terrorists infiltrat-
ing from Algeria. We have had several hundred Special
Forces troops in that country training the local military in
counterterrorism operations. There has to be an embassy
in a country to coordinate that type of activity. If we
have nobody on site, we leave the field to others who have
embassies in every country, especially China and Russia.
What kind of idea is it to examine visa applicants
through SKYPE or similar [video link] devices? The
local U.S. diplomat examines in the local language and
understands who should be allowed in or not. Most of
the work is in determining if an applicant is likely to
burrow into the United States and not go back. Will
some examiner sitting in Milwaukee at his computer
screen be able to make a judgment about that?
Herman J. “Hank” Cohen
Former Assistant Secretary of State for Africa
Washington, DC
As to processing visas from the United States, I
remain skeptical that it is best to send a diplomat, his
or her family, and their personal effects halfway around
the world for this purpose when the same person could
do the job from the United States at a fraction of the
cost with little loss in efficiency. And at the end of three
years we would not have to rotate this person home or
send him or her to some other far-flung locale while
bearing the substantial relocation costs yet again.
w w w . rand . o r g
 News

Relaxing Postal Service’s Mailbox Monopoly Could Reduce Safety

If the current U.S. Postal Service
(USPS) monopoly on access to
mailboxes is relaxed, it could have
a moderate negative effect on pub­
lic safety and mail security, accord­
ing to a RAND study.
“Allowing private companies
to compete with the postal ser­
vice could increase the incidence
of theft at the mailbox, increase
the risks of mail-related financial
crimes such as identity theft, and
increase the delivery of suspicious
items to consumers, including
explosives-related items,” said Lois
Davis, the study’s lead author and
a senior RAND policy researcher.
Key reasons for the increased
risks are differences in staff train­
ing between the USPS and private
couriers and the increased num­
ber of personnel who would have
access to mailboxes. There are also
variations among couriers in their
screening procedures and detec­
tion techniques.
Although private couriers
did not respond to requests for
data, publicly available documents
and suggestive data from the U.S.
Postal Inspection Service’s incident
database allow for a comparison
between the public and private sys­
tems. These data relate to a point
leaking substance, triggered radio­
logical alerts, or met some other
warning criteria.
The couriers screened the
items but detected none of them as
suspicious. In contrast, the USPS
screening and detection system
identified 87 percent of the 267
items as suspicious. Most such
items turn out not to be seri­
ous; still, the large discrepancy in
screening and detection rates sug­
gests that the USPS detects suspi­
cious items with greater sensitivity
than do couriers.
How much greater the risk
might be depends on how much
mail would shift to couriers and
whether only the major couriers
or a selected range of them were
allowed to enter the postal market.
Fully understanding this matter
requires more detailed data on
courier screening practices.
“Relaxing the mailbox monop­
oly could also dilute the U.S. Postal
Inspection Service’s ability to track
U.S. Postal Service Appears More Likely Than Private Couriers to
Detect Suspicious Packages
Screening/
Private detection
and police mail-related crimes,”
Davis noted. A relaxation would
limit federal jurisdiction over deliv­
eries by couriers and could raise
the cost and complexity of postal-
inspection-service investigations.
While there are no specific
pending proposals to relax the
mailbox monopoly, several mea­
sures should be considered as
part of any effort to do so. These
include establishing national train­
ing standards for private couriers,
identifying what agency should
be responsible for oversight and
enforcement of those standards,
and creating a national reporting
system to allow the U.S. Postal
Inspection Service and the U.S.
Department of Justice to track
mail crimes and crime involving
couriers. ■
For more information: The Role of the
United States Postal Service in Pub­
lic Safety and Security: Implications of
Relaxing the Mailbox Monopoly, RAND/
Mg-800-USPS, iSBN 978-0-8330-4615-4,
2008.

at which the USPS and courier courier Customers

system
systems overlap: the “last mile” “Last mile” delivery
of items beyond the
of delivery. At that point, couri­ courier network
U.S. Postal
ers may transfer mail to the USPS Service Customers
when the destination is beyond the system Screening/ Screening/
courier’s own delivery network (see detection detection

the figure).
“Last mile” items detected as suspicious: 267
The database revealed 267 sus­ • Percent detected by USPS screening: 87%
picious last-mile items from 2003 • Percent detected by customers: 13%

to 2007—items the USPS received

SOURCE: The Role of the United States Postal Service in Public Safety and Security, 2008.
from couriers that either had a

w w w . R A N D . o R g R A N D R e v i e w / F A L L 2 0 0 8 5
 News
Managing Environmental Issues Can Improve Army Mission Success
By better managing environmen­
tal issues during deployments, U.S.
Army units can gain tactical and
strategic advantages that will help in
combat and post-conflict operations
and can boost overall mission suc­
cess, according to a RAND study.
Many environmental issues
can affect the planning and execu­
tion of military operations or can
be affected by them. These issues
include clean water, sewage-related
infrastructure, soldier health, com­
pliance with environmental laws,
sustainability, protection of histori­
cal and cultural sites, and manage­
ment of agricultural and natural
resources. The trend over the past
15 years toward longer deployments
and more emphasis on stability
and counterinsurgency operations
amplifies the importance of the
environment for army operations.
In countries where environ­
mental conditions and infrastruc­
Rebuilding the Infrastructure Is One of the Highest Priorities for Iraqis
90
80 85
Percentage of respondents
70
60
55
50
40
30
30
20
10
0
Regaining Rebuilding Holding
public the elections
security infrastructure for a
national
government
SOURCE: ABC News Poll, March 2004.
NOTE: Responses show first, second, or third priority.
6 R A N D R E V I E W / F A L L 2 0 0 8
ture are severely degraded, the
crucial priorities of local inhabit­
ants include clean drinking water,
effective sewage and trash systems,
and viable farmland. Public opin­
ion surveys indicate, for example,
that Iraqis care about these issues a
great deal (as shown in the figure).
U.S. experience in Iraq suggests
that providing these life-sustaining
infrastructures can influence whether
the inhabitants support the local gov­
ernment and U.S. goals and objec­
tives. The U.S. Army has also had
a positive influence on the environ­
ment in operations in Afghanistan,
Iraq, and the Balkans, where U.S.
soldiers have helped to build wells,
sewage treatment plants, and other
water infrastructure systems, accord­
ing to the study.
“Commanders and planners
can take steps in the combat phase
to preserve existing environmen­
tal infrastructure and resources
30
28
Ensuring Reviving
that people the
can make economy
a decent
living
that will be vital once combat
has ended,” said lead author and
RAND senior policy analyst David
Mosher. “Determining what to
preserve will demand that leaders
and planners take a strategic view
of the operation, including what
the end result ought to be.”
Environmental issues can also
affect soldier health and safety, the
costs of an operation, the logistical
burden of supporting the forces, and
diplomatic relations. The study finds
that long deployments and extended
post-conflict operations like those
in Iraq, Afghanistan, and the Bal­
kans expose U.S. forces to a variety
of environmental problems. At one
base camp in Afghanistan, long-
standing pollution problems caused
short-term respiratory illnesses for
U.S. soldiers until the problem was
identified and addressed.
The study finds that command­
ers have not usually given envi­
ronmental concerns high priority
during planning, despite the effect
that environmental conditions can
have on troop health, safety, and
security, and despite their impor­
tance for the local population.
The researchers recommend
that U.S. Army leaders give more
weight to the strategic, operational,
and tactical aspects of environ­
mental considerations during plan­
ning and operations and develop
comprehensive standards and best
practices to address environmental
issues during contingencies. ■
For more information: Green Warriors:
Army Environmental Considerations
for Contingency Operations from Plan­
ning Through Post-Conflict, RAND/MG­
632-A, ISBN 978-0-8330-4318-4, 2008.
W W W . R A N D . O R G

Does Political Reform in Arab World Help to Counter Terrorism?
Democratic political reforms can
marginalize extremists and under­
mine support for terrorism, but
enacting merely cosmetic reforms
and backtracking on democratiza­
tion can exacerbate the risk of terror­
ism, according to a RAND study.
The study looked at the effects
of liberalization processes on domes­
tic political violence in six Arab
states: Algeria, Bahrain, Egypt, Jor­
dan, Morocco, and Saudi Arabia.
The belief that greater democ­
racy reduces terrorism has played a
significant role in recent U.S. foreign
policy. However, the study finds
little direct evidence that democ­
racy has either a positive or negative
effect on terrorism. Using data from
the RAND–Memorial Institute for
the Prevention of Terrorism, the
study compared the number of ter­
rorist incidents in each country with
its score on the Freedom House
index, which ranks a country’s level
of freedom based on political rights
and civil liberties.
The figure shows the results
for Egypt from 1985 to 2007.
Although there is some relation­
ship between terrorist incidents
and Freedom House rankings—
for example, a rise in terrorism in
the early 1990s at the same time
that Egypt’s Freedom House score
worsened (rose higher)—there is
not a strong correlation between
the number of incidents and the
degree of liberalization over time.
The results for the other countries
show a similar pattern.
“Political reforms had little
effect on promoting norms of tol­
erance or inclusive political insti­
W W W . R A N D . O R G
News
tutions, as democracy advocates Some believe democracy is
might expect,” said Dalia Dassa dangerous to U.S. interests in the
Kaye, the report’s lead author Middle East, but the study recom­
and a RAND political scientist. mends “realistic democracy promo­
“Instead, they often exacerbated tion.” Such a policy would apply
existing societal cleavages, because sustained pressure to strengthen
those in power tended to ‘stack democratic institutions and prac­
the deck’ to maintain their power tices and to scrutinize reforms;
when implementing reforms.” emphasize human rights, trans­
Moreover, cosmetic reforms, parency, judicial reform, and the
or those put into place and then rule of law; avoid taking sides in
withdrawn, can destabilize a coun­ elections; safeguard security while
try by eroding the legitimacy of respecting the rule of law; engage
the system, thereby undermining Islamic parties while leveling the
moderate factions among political playing field for other types of
opposition groups and undercut­ political opposition; and recog­
ting public support for counterter­ nize political motivations behind
rorism efforts. both sides of the democratization
Then again, even limited debate. ■
reforms can have some beneficial
effects. In some cases, allowing For more information: More Freedom,
Less Terror? Liberalization and Political
opposition movements to partici­ Violence in the Arab World, RAND/MG­
pate in the political process has 772-RC, ISBN 978-0-8330-4508-9, 2008.
marginalized radical elements and
prevented more violent tactics.
There Is Little Correlation Between More Freedom and Less Terror: The Case of Egypt
18 7
16 Freedom House
score 6
14
Freedom House score
Incidents of terrorism
12 5
10
4
8 Incidents of
terrorism
6 3
4
2
2
0 1
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Year
NOTE: A score of 1 indicates the highest degree of freedom, and 7 the least.
R A N D R E V I E W / F A L L 2 0 0 8 7
RAND Then and Now
From Microdata to Megatrends
The Continuing Legacy of the RAND Health Insurance Experiment
A LTHOUGH MANY EXPERTS AGREE that there has
been inadequate progress in U.S. health policy over the past
three decades—a period in which health care reform has been
on and off the policy agenda—there has been steady progress in
the analytical tools used to inform health policy. And now those
tools may be positioned to play a stronger role than ever before.
The story begins with the RAND Health Insurance Experi­
ment. Begun in 1974 and completed nearly a decade later in
1982, the experiment remains the largest and most sustained
evaluation of health insurance design effects ever conducted and
stands out today as the only randomized trial of the effects of
cost sharing on medical service use, quality of care, and health.
While the experiment’s influence on U.S. health policy has
been widely acknowledged, a less visible legacy has been the evo­
lution of health policy “microsimulation models”: computerized
statistical tools that model the individual behaviors of people,
families, or firms to estimate the likely aggregate outcomes of
a change in health policy. The model that RAND researchers
created in 1988, based on the results of the Health Insurance
Experiment, has been used in many subsequent analyses to
predict spending and insurance choices and has inspired the
development of many health policy microsimulation models
being used today.
Building the Foundation
Because policymakers cannot know in advance how people
will respond to a change in policy, being able to simulate likely
consequences—both intended and unintended—becomes cru­
cially important, especially in the complex area of health policy.
Emmett Keeler, Joan Buchanan, and other RAND colleagues
designed the original microsimulation model based on the
actual behaviors that were observed in the Health Insurance
Experiment.
A new generation of “dynamic”
models can project changes
in the health and spending of
people over time.
8 R A N D R E V I E W / F A L L 2 0 0 8
“Our original model predicted the impact of different
kinds of insurance on total medical spending versus out-of­
pocket spending and estimated the value of that spending to
the patient—precisely, how the mythical ‘economically rational
person’ would pick insurance,” said Keeler.
The model used statistical estimates to “simulate spending
on episodes of treatment by a representative group of families,
an effective and fairly new approach to the study of demand,”
Buchanan noted. The simulation showed that cost sharing
affects the number of episodes of illness for which people seek
treatment and has much smaller effects on the amount of treat­
ment in each episode of treatment. The simulation also showed
that small deductibles can restrain excess demand and that large
individual caps on out-of-pocket spending can limit risk without
greatly increasing spending.
In the late 1980s, the RAND model was used to simulate
the effects of a mandate that all employers provide health insur­
ance to their employees. The model estimated that both health
service use and employers’ liability for health care costs would
increase.
The model was used again in the 1990s to simulate the
effect of adding medical savings accounts (MSAs) to the other
features of the Health Insurance Reform Act of 1995 (also
known as Kassebaum-Kennedy). Republicans had pushed for
MSAs, but Democrats feared they would be utilized by only the
healthy and wealthy and would damage the traditional insur­
ance market.
“The resulting controversy threatened to kill the legislation,”
said Keeler, “but simulations showed that the overall insurance
market would not be harmed. As a result, the two sides were able
to reach a compromise, and the main part of the bill, including
a demonstration of MSAs, passed.”
Modeling the Future
The original simulation model was a “static” one that predicted
what would happen in a year. As the field of health policy simu­
lation has progressed, a new generation of “dynamic” models
has been developed that can project changes in the health and
spending of people over time.
One example is RAND’s Future Elderly Model (FEM),
which helps forecast trends in health, health spending, medi-
W W W . R A N D . O R G

AP IMAGES/JOHN MILLER
Retirees Harry and Joyce Smith hold on their laps evidence of an emerging
trend: their long-term health insurance policy. The Smiths, of Green Valley,
Arizona, are among eight million Americans with long-term care insurance—
an area in which insurers expect big growth as baby boomers move into
their senior years.
cal technology, longevity, labor supply, and earnings. FEM is
being used to examine such trends among people over 50 in the
United States, Denmark, France, Germany, Italy, the Nether­
lands, Spain, and Sweden.
“Because of FEM, policymakers will be better equipped
to design social programs that improve health with the lowest
effective public and private expenditures,” said Dana Goldman,
who developed the model with his RAND colleagues. FEM is
at the heart of research being done in the RAND Roybal Center
for Health Policy Simulation.
RAND Health’s Comprehensive Assessment of Reform
Efforts (COMPARE) initiative has developed a new microsimu­
lation model that builds on what has been learned from prior
RAND modeling. “Starting in early 2009, COMPARE will
provide online access to the results of simulations on the effects
of coverage-related policy changes on the number of people with
insurance, spending, consumer financial risk, and health relative
to what would occur in the absence of any change in policy,”
W W W . R A N D . O R G
RAND Then and Now
To commemorate the 60th anniversary of the RAND Corporation,
which was established as a nonprofit institution in 1948, stories about
“RAND Then and Now” have appeared in RAND Review throughout 2008.
according to Elizabeth McGlynn, who co-leads the initiative
with Jeffrey Wasserman.
Using COMPARE, which will be available to the general
public, RAND and other users will be able to see the extent to
which various health care reform proposals achieve their objec­
tives. RAND will examine the effects of both incremental and
multifaceted policy changes. The results will provide a common
base of knowledge for policy debate and development, carrying
on the legacy of health policy simulation begun more than 30
years ago. ■
Related Reading
“Can Medical Savings Accounts for the Nonelderly Reduce Health Care
Costs?” Journal of the American Medical Association, Vol. 275, No. 21,
June 1996, pp. 1666–1671, Emmett B. Keeler, Jesse D. Malkin, Dana P.
Goldman, Joan L. Buchanan. Also available as RAND/RP-540, 1996.
The Demand for Episodes of Medical Treatment in the Health Insurance
Experiment, Emmett B. Keeler, Joan L. Buchanan, John E. Rolf, Janet M.
Hanley, David Reboussin, RAND/R-3454-HHS, 1988, 135 pp., ISBN 978-0­
8330-0845-9, $35.
Free for All? Lessons from the RAND Health Insurance Experiment, Joseph
P. Newhouse, Insurance Experiment Group, Cambridge, Mass.: Harvard
University Press, 1993.
Mandating Health Insurance Benefits for Employees: Effects on Health
Care Use and Employer’s Costs, M. Susan Marquis, Joan L. Buchanan,
Emmett B. Keeler, John E. Rolph, Man-bing Sze, RAND/N-2911-DOL, 1989,
43 pp., $23.
Modeling the Health and Medical Care Spending of the Future Elderly,
RAND/RB-9324, 2008, 8 pp. As of press time (Web only):
www.rand.org/pubs/research_briefs/RB9324/
“Simulating Health Expenditures Under Alternative Insurance Plans,”
Management Science, Vol. 37, No. 9, September 1991, pp. 1067–1090,
Joan L. Buchanan, Emmett B. Keeler, John E. Rolph, Martin R. Holmer.
Also available as RAND/RP-205, 1993.
RAND COMPARE Web site: www.randcompare.org/
R A N D R E V I E W / F A L L 2 0 0 8 9
 Asian Exchange
China and India Trade Lessons in Education
and Health
By Charles A. Goldman, Krishna B. Kumar,
Ying Liu, Sai Ma, and Neeraj Sood
Charles Goldman is associate director of RAND Education
and a professor at the Pardee RAND Graduate School
(PRGS). Krishna Kumar is a senior RAND economist and PRGS
professor. Ying Liu is a doctoral fellow at PRGS. Sai Ma, a
PRGS alumna, is an assistant scientist at the Johns Hopkins
Bloomberg School of Public Health. Neeraj Sood is a RAND
economist and PRGS professor.
P
henomenal growth in China and India has drawn
attention to their relative performance in various
spheres, but there has been little comparison of
their education and health systems. Comparing these
systems can illuminate their worthiness as examples for
one another and for the rest of the developing world.
India has focused on higher education for a few,
while China has focused on basic education for the
masses. As one would expect, India enjoyed a com­
petitive edge over China in higher education until
very recently, while China has outperformed India in
primary and secondary education. Both models have
contributed to economic growth but are likely to pro­
duce very different distributional outcomes.
India can learn from China how to improve the
efficiency of public education, particularly by provid­
ing appropriate incentives to teachers and schools,
whereas China can learn from India how to expand
private higher education. India is unusual, however,
in that it has benefited from a broad base of English-
speaking workers. The universal education strategy of
China might be safer for other countries to emulate.
10 R A N D R E V I E W / F A L L 2 0 0 8
Both countries have made substantial gains in life
expectancy and disease prevention, but neither health
system offers much protection against financial risk.
Both countries should restructure health care financing
to reduce out-of-pocket costs; increase access to care
for the poor, especially in rural areas; modify hospital
capabilities to suit local needs; make patient satisfaction
a higher priority; reduce the overuse of health services
associated with regulated prices; and strengthen com­
municable disease surveillance and control.
China should emulate two aspects of India’s
health system: greater involvement of the private
sector, where medical students increasingly prefer to
work, and reduced regulation of prices. For example,
the overutilization of newly marketed drugs in China
is a very problematic issue that raises concerns about
wasteful spending as well as quality of care. The Chi­
nese government should focus on regulating the qual­
ity of drugs rather than their price.
India should emulate two aspects of China’s
health system: greater spending on basic national
health infrastructure, such as clinics and preventive
care services at the village level, and greater efforts to
reduce preventable deaths from communicable dis­
eases and from poor maternal and infant health. The
Indian government should commit more resources to
improving hygiene, water quality, and nutrition.
Education as Destiny
Since the end of the Chinese Civil War in 1949, China
has made great strides in educating the masses. The
primary school gross enrollment rate (which includes
those who do not belong in the relevant age group for a
given level of education) reached 100 percent in 1985.
W W W . R A N D . O R G
The secondary gross enrollment rate rose above 70
percent in 2003, representing a huge increase from 40
percent in 1960. Most impressively, the adult literacy
rate soared from about 20 percent in the late 1940s to
93 percent in 2007 (see Figure 1).
India, on the other hand, devoted a large propor­
tion of its education resources to higher education, par­
ticularly in science and technology. This has resulted in
a higher percentage of college-educated people than in
China (see Figure 2). This has also left India with some
of the finest institutes of higher education, notably the
Indian Institutes of Technology and the Indian Insti­
tutes of Management. Meanwhile, the Indian popula­
tion at large remains uneducated. According to 2004
worked well in China, and India
could explore similar strategies. The different
India’s experience with pri­
vate higher education offers a patterns of
possible direction for China. In economic
2005–2006, private higher educa­
tion accounted for 31 percent of development
total higher education enrollment appear to mirror
in India, compared with a modest
9 percent in China. The prolifera­
the differing
tion of private institutes has greatly education models.
helped to expand the higher educa-
tion capacity in India at a time when public enroll­
ment and capacity have increased only marginally.

data, India, with an adult literacy rate of 61 percent, Private institutes, typically more sensitive to labor

lagged far behind China’s 91 percent and was barely even

with sub-Saharan Africa. India’s female adult literacy
rate of 48 percent in 2004 was actually lower than that Figure 1—Adult Literacy in China Has Climbed Higher Than in India
of sub-Saharan Africa’s 53 percent. 120
The different patterns of economic development China
Literacy rate among those

100 India 97 93
appear to mirror the differing education models. A 90
79 77
larger labor pool with basic education has allowed China 80
15 and over

66 66
to attract large-scale manufacturing plants. Education 60 55 55
51
has equipped Chinese workers with the basic skills for 41
manufacturing and allowed them to travel from rural 40
26
areas to the jobs in urban areas. In contrast, a larger 20
stock of college-educated, technically savvy, English-
0
speaking labor has made India a choice destination for Females Males Total Females Males Total
international software and services outsourcing. 1981–1982 2007
Developing countries in Africa and the rest of Asia SOURCE: UNESCO Institute for Statistics, Custom Tables. As of November 10, 2008:
stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=143&IF_Language=eng
can draw lessons from the contrasting experiences of
NOTE: 1981 data are for India; 1982 data are for China.
China and India. Countries with little disparity in edu­
cation achievement tend to have smaller variations in
income. Those with concentrated education attainment
are more likely to see larger income gaps. Japan and the Figure 2—For Decades, India Has Had a Higher Percentage of Adults
East Asian “Tigers” are good illustrations of the former, Who Have Ever Attended College Than Has China

while Latin America is often cited as an example of the 5

latter. Persistent inequality can derail economic reforms China
4.1
4
by removing political support for them. India 3.3
Percentage

3 2.8
China also offers an excellent example of how 2.4
school choice and merit-based teachers’ salaries can 2 1.9

provide incentives to achieve higher performance. In 0.9 0.8

1.1
0.9
1
Chinese public schools, teacher salaries usually include 0.3
0
a fixed component and a bonus component that 1960 1970 1980 1990 2000
depends on student scores. Students can attend schools Year
outside their neighborhoods, provided they pay “choice SOURCE: “International Data on Educational Attainment: Updates and Implications,” Cambridge,
Mass.: Harvard University, Center for International Development, Working Paper No. 42, April 2000,
fees” to the chosen schools. Better performance allows Robert J. Barro, Jong-Wha Lee, Appendix Data Tables. As of November 7, 2008:
a school to charge higher fees in the local education www.cid.harvard.edu/ciddata/ciddata.html
NOTE: “Adult” refers to those age 15 and over.
market. Evidently, this market-based approach has

W W W . R A N D . O R G R A N D R E V I E W / F A L L 2 0 0 8 11
 Students work
with their teacher
in the chemistry
department of
the private Amity
University in
Noida, India. If
Amity’s founder
has his way, in
less than a decade
it will be the cen­
ter of a vast chain
of private univer­
sities, feeding a
ravenous middle-
class appetite for
education left
unsatisfied by the
country’s public
university system.
AP IMAGES/MUSTAFA QURAISHI

market conditions, also have the potential to improve
the relevance of higher education, a concern for both
India and China.
Health as Wealth
Overall, people in China live longer, healthier lives than
do people in India. The difference for women is larger
than that for men, owing in part to the tenfold greater
maternal death rate during childbirth for Indian women
compared with Chinese women (see the table). Further­
more, China has achieved better
prevention and control of commu­
The reduced focus nicable diseases. Noncommuni-
cable diseases, particularly chronic
on public health . . . obstructive pulmonary disease and
may be one of the cancer, now account for 77 percent
of all deaths in China. In India, by
most important comparison, more than 40 percent
health issues of all deaths are still due to com­
municable diseases, including HIV/
emerging in each AIDS, diarrheal diseases, respiratory
country. infections, and perinatal conditions.
The health systems in both countries provide
little protection from financial risk. In China, medi­
cal expenditures have become a principal cause of
poverty, swelling the number of rural households that
are below the poverty line by 44 percent. In India, up
to a third of hospitalized patients are impoverished by
medical costs.
The heavy burden of health costs in China and
India is not surprising given the lack of well-developed
health insurance schemes in both countries. This situ­
ation is exacerbated by two factors. First, the lack of
access to affordable care means that people defer pre­
ventive and other necessary care; consequently, when
they do seek care, they typically have a more serious
and costly medical condition. Second, for those who
seek care, physician-induced overutilization of care
further increases the financial burden.
The chief challenge for both systems is to reduce
the out-of-pocket burden on individuals. This can
be accomplished by providing nationalized or social
insurance, as is common in Europe, or by encouraging
private insurance, as is common in the United States.

12 R A N D R E V I E W / F A L L 2 0 0 8 W W W . R A N D . O R G
China is leaning toward the former, whereas India People in China Live Longer, Healthier Lives Than Do People
seems to be favoring the latter. But both public and in India
private insurance should be considered in both coun­ Key Health System Indicators China India
tries to meet a diversity of needs. Financing
To contain costs further, both countries should Total expenditure on health per capita (2003) $61 $27
consider alternative reimbursement mechanisms, such Out-of-pocket expenses as a percentage of
as prospective payment systems that cover predeter­ total medical spending (2003) 56% 73%
mined amounts of money, similar to how Medicare Organization
operates in the United States. Both China and India Private providers as a percentage of total
medical care provision (China in 2002,
should also consider vertically integrated provision of India in 2003) 4% 79%
health insurance and health care, similar to health
Health Outcomes
maintenance organizations.
Life expectancy (2004) 72 years 62 years
In the 1980s, both countries faced pressure to
Maternal death rate during childbirth per
increase the role of the private sector in providing 100,000 women (2000) 56 540
health care services. But health care privatization has
SOURCES: The World Health Report 2006: Working Together for Health, Geneva:
had some negative effects. Citizens of both countries World Health Organization, 2006; Health System Performance Assessment:
now bear greater burdens in financing their health World Health Survey, 2003: India, Mumbai: International Institute for Population
Sciences, and Geneva: World Health Organization, 2006.
care needs. In addition, the private sector has a greater NOTE: Total expenditure on health per capita is shown in U.S. dollars at average
exchange rates.
incentive to provide curative rather than preventive
treatments. The reduced focus on public health, espe­
cially on the prevention of communicable diseases and
on the promotion of healthy lifestyles, may be one of
the most important health issues emerging in each
country.
Both China and India face the critical challenge of
increasing access to care for the poor. Both countries
need to build more primary health care facilities and
to better manage existing facilities. Special attention
should be paid to improving access to care in rural and
remote areas by expanding their programs for educa­
tion, screening, immunization, and transportation
assistance. Ensuring resources for preventive and basic
curative care will help local clinics and community
hospitals continue to exist and improve.
China and India account for more than 40 percent
of the world population. The health policy choices of
AP IMAGES/EUGENE HOSHIKO
these two countries not only will affect their citizens but
Outside Changzhou, a sprawling industrial city in eastern China, sits a small factory
also could give policymakers around the world ideas for farm processing chemicals from pig guts into heparin, a blood thinner that has been
coping with their own health care challenges. ■ linked to 19 deaths and hundreds of allergic reactions.

Related Reading
Caring for a Third of the World’s Population: Challenges for
the Health Systems of China and India, Sai Ma, Neeraj Sood,
RAND/CP-521 (6/08), 4 pp. As of press time (Web only):
www.rand.org/pubs/corporate_pubs/CP521-2008-06/
China and India: Different Educational Paths Toward Prosper­
ity, Ying Liu, Krishna B. Kumar, RAND/CP-521 (2/08), 4 pp. As of
press time (Web only):
www.rand.org/pubs/corporate_pubs/CP521-2008-02/
A Comparison of the Health Systems in China and India, Sai
Ma, Neeraj Sood, RAND/OP-212-CAPP, 2008, 58 pp., ISBN 978­
0-8330-4483-9, $23.50. As of press time:
www.rand.org/pubs/occasional_papers/OP212/
Education and the Asian Surge: A Comparison of the Educa­
tion Systems in India and China, Charles A. Goldman, Krishna
B. Kumar, Ying Liu, RAND/OP-218-CAPP, 2008, 53 pp. As of
press time (Web only):
www.rand.org/pubs/occasional_papers/OP218/

W W W . R A N D . O R G R A N D R E V I E W / F A L L 2 0 0 8 13
A BETTER DEAL
TWELVE SUGGESTIONS FOR THE NEW U.S. PRESIDENT
By James A. Thomson
James Thomson is president and chief executive officer of the RAND
Corporation.
udging by the emerging worldwide consensus, President-
J elect Barack Obama is about to assume an economic
burden second only to the one facing President-elect
Franklin Roosevelt upon his entering the Oval Office in Janu­
ary 1933. The test for the new U.S. president will be to offer
leadership and financial stewardship worthy of the challenge.
As early as April 2008, an International Monetary Fund
document called the economic fallout from the collapse of the
U.S. subprime mortgage market “the largest financial crisis in
the United States since the Great Depression.” The forecast grew
even dimmer this past autumn as banks and brokerages failed, as
turmoil roiled Wall Street, and as the credit crisis spread beyond
U.S. shores. In October 2008, Deutsche Bank predicted that
major industrialized economies in 2009 would suffer their worst
slump since the 1930s: “We now expect a major recession for the
world economy over the year ahead, with growth in the industrial
countries falling to its lowest level since the Great Depression.”
The financial crisis will consume much of the president’s
attention and may limit his ability to achieve other important
policy goals. But the dire economic circumstances also offer the
new administration an opportunity—if not a duty—to rethink
old ways of governing and to replace them with ways that are
smarter, better, and cheaper.
The dire economic circumstances
offer the new administration an
opportunity—if not a duty—
to rethink old ways of governing.
14 R A N D R E V I E W / F A L L 2 0 0 8
Eight of the twelve following essays suggest that the nation’s
current policies are not the most efficient ways of doing things.
While it is unclear whether the proposed alternatives would cost
less, they would offer more bang for the national buck. These are
changes for the better that we can afford.
Robert Hunter reports that the ratio between military and
nonmilitary U.S. national security spending is now 17 to 1.
According to Hunter, that is nowhere near the kind of balance
required between military and civilian efforts at a time when
civilian reconstruction activities are the linchpins of stabiliza­
tion and counterinsurgency operations.
Brian Jenkins supports numerous shifts in counterterrorist
strategy to make it sustainable. Keep the focus on jihadists. Avoid
large-scale military buildups when local capabilities can be devel­
oped. Reorganize U.S. forces around customized teams of military
and civilian specialists. Close Guantanamo. And secure the home­
land with infrastructure improvements that are needed anyway.
Seth Jones urges a modest increase in U.S. and NATO
forces in Afghanistan, including a redeployment of some U.S.
forces from Iraq. But he also urges a new balance between top-
down efforts to create a central government and bottom-up
efforts to secure local support, working with tribes, subtribes,
and clans to help establish order and governance.
Christine Fair wants a better return on the U.S. investment
in Pakistan. First, she advises, make U.S. military assistance
to Pakistan contingent on its resolute action against militant
groups. Meanwhile, expand U.S. aid to the country’s civilian
institutions, such as the police, courts, and civil society groups
that are key to cultivating a democratic Pakistan.
Turning to domestic policy, Titus Galama and James Hosek
see the debate over the U.S. economy lurching from one fix to
the next, devoid of a comprehensive plan to spur innovation and
competitiveness. Such a plan would allow U.S. leaders to make
decisions on related matters, even immigration and education
policies, in accordance with a larger vision.
On energy policy, Michael Toman advises the new president
to weigh the environmental and economic trade-offs of myriad
W W W . R A N D . O R G

AP IMAGES/RON EDMONDS
A passerby peers through an ice sculpture called “Main Street Meltdown”
in New York City on October 29, 2008, the 79th anniversary of the Black
Tuesday stock market crash of 1929 that led to the Great Depression. The
artists, Nora Ligano and Marshall Reese, said the sculpture would take 10
to 24 hours to completely melt down.
energy options. He recommends some combination of renew­
able energies, unconventional fossil fuels, energy efficiency, and
conservation.
On education policy, Brian Stecher and Laura Hamilton argue
for greater flexibility in the accountability systems associated with
the No Child Left Behind Act. Being more responsive to local con­
ditions could reduce local opposition to this federal investment.
Finally, there are few better examples of wasteful national
spending than the U.S. health care system, and few policy areas
have been more resistant to reform. To help break the logjam,
Elizabeth McGlynn and Jeffrey Wasserman offer a tool to com­
pare the effects of proposed reforms across multiple dimensions
affecting numerous interest groups.
McGlynn and Wasserman have begun to do for health
care what needs to be done for all areas of public policy. It is
time to take stock of the options, to cash out the losses, and to
make wiser investments in the public interest. The eight essays
cited above—along with the accompanying essays on Iraq, Iran,
Turkey, and nuclear proliferation—propose some of the ways in
which the new U.S. president can offer America a better deal. ■
While it is unclear whether the
proposed alternatives would cost
less, they would offer more bang
for the national buck. These are
changes for the better that we can
afford.
W W W . R A N D . O R G
A BETTER DEAL
MILITARY
INTERVENTIONS
SHIFT THE BALANCE TO
CIVILIAN ACTIVITIES
By Robert E. Hunter
Robert Hunter, U.S. ambassador to NATO from 1993 to 1998, is
a senior adviser at RAND.
o do a better job of managing the kinds of U.S.
T military interventions and the aftermaths that have
become prevalent since the 1990s, the new president
and Congress should shift substantial resources from the nation’s
defense agencies and military services to the U.S. Department of
State and U.S. Agency for International Development. Military-
civilian efforts must also be integrated from top to bottom, with
civilians and military officers being required to gain extensive
cross-agency experience in one another’s disciplines.
The ratio between military and nonmilitary U.S. national
security spending is now 17 to 1. A major increase in the share
for nonmilitary activities is in order. This should include adding
at least 1,100 foreign service officers to the U.S. State Depart­
ment, adding 2,000 officers to the U.S. Agency for International
Development, and creating a separate agency similar to the now-
defunct U.S. Information Agency.
These and the other recommendations below can be
implemented without changing the National Security Act and
without major legislation, except to increase funding for non­
military national security activities. The new administration and
Congress can make these changes rapidly and largely through
administrative action.
U.S. success in interventions abroad, particularly counter­
insurgencies and counterterrorism, requires more coordination and
integration of military and nonmilitary efforts, activities, agencies,
and personnel than ever before. Arms-length relationships between
departments like Defense and State are no longer acceptable.
Preparing for success must begin with cross-agency training
and education in modern techniques of military and nonmili­
tary activities. There needs to be a reorganization of the civilian
agencies to promote career-enhancing professional exchanges
R A N D R E V I E W / F A L L 2 0 0 8 15

AP IMAGES/RAHMAT GUL
James Kunder, of the U.S. Agency for International Development (USAID),
cuts the ribbon at right while Ata Noor, governor of Afghanistan’s Balkh
province, cuts the ribbon at left to inaugurate the USAID-funded Gorimar
Industrial Park in Mazar-i-Sharif, the capital of Balkh province, on October
29, 2008.
among military and nonmilitary personnel, comparable to the
practice that was adopted by the military services under the
Goldwater-Nichols Act passed in 1986.
Training in foreign cultures, history, and languages must
be radically enhanced for both military and civilian personnel.
Tours in conflict zones need to be extended for vital personnel
who are engaged in day-to-day relations with local officials and
populations.
Spending authority should be delegated to personnel in
the field. This should include authority for diplomats and
commanders to move money flexibly across tasks and agen­
cies. Responsibilities should be assigned to those agencies and
personnel—military or civilian—best able to carry them out.
More resources need to be put into imaginative efforts like
provincial reconstruction teams that rely on deployed personnel
from civilian departments, such as Agriculture, Justice, Health
and Human Services, and Education.
Personnel deployed by the United States must also build
international partnerships with NATO, the European Union,
and the United Nations. Barriers to cooperation should be bro­
ken down. NATO’s Allied Command Transformation, which is
one of the two strategic military commands of NATO, should
be tasked to help make this happen.
Presidential leadership is key. Congress must play its part. All
stand to gain. As noted by U.S. Secretary of Defense Robert Gates,
having “robust civilian capabilities available could make it less
likely that military force will have to be used in the first place.” ■
16 R A N D R E V I E W / F A L L 2 0 0 8
A BETTER DEAL
COUNTERTERRORISM
WAGE A SUSTAINABLE CAMPAIGN
By Brian Michael Jenkins
Brian Jenkins, often deemed the dean of America’s terrorism researchers,
is a senior adviser to the president of the RAND Corporation.
he struggle against terrorism will last many years.
T It will require a sustainable strategy that evolves as
the terrorist threat itself mutates. Strategic principles
rather than a fixed strategy should guide our efforts.
The prospect of lengthy conflicts and economic difficul­
ties make it tempting for the United States to disengage and to
focus on domestic issues. But the United States must remain
involved in efforts to destroy al Qaeda and its affiliates, to
defend Afghanistan, to help maintain stability in Pakistan, and
to work closely with allies to improve their capacity to deal with
terrorist threats.
The term “Global War on Terrorism” enabled us to mobilize
national resources and seize the initiative. But it quickly grew
into an unwieldy assortment of ambitions that encompasses too
many things. We oppose all terrorists, but we must define our
missions with limited goals.
The jihadist enterprise inspired by al Qaeda’s ideology
remains the principal terrorist threat to the United States. It
should remain the principal focus of our counterterrorism
efforts—al Qaeda must be destroyed. This means smashing
its organization, defeating its plots, blunting its message, and
shrinking its recruiting reservoir.
Political warfare, including public diplomacy and psycholog­
ical operations, must be given greater priority. This will require a
more formal structure than the current interagency effort.
The United States has provided vigorous leadership to
global efforts against terrorism, but progress will require inter-
Our opposition to torture must be
unequivocal and must apply to all
U.S. agencies.
W W W . R A N D . O R G
national cooperation and multilateral efforts, the composition
of which will change with circumstances. Multiple overlapping
campaigns will be pursued by multiple overlapping coalitions.
Our strategy must be consistent with our values. We should
close down Guantanamo, promptly release those who have been
wrongly held, and develop a patently fair procedure to try the
rest, while holding onto the most dangerous terrorist planners.
Our opposition to torture must be unequivocal and must apply
to all U.S. agencies. Judicial oversight of domestic intelligence
collection should be fully restored.
We must continue our military and economic commitment
to Afghanistan, even though the conflict there could continue
for another 30 years. Some additional American reinforcements
may be needed, but we should avoid the kind of large-scale mili­
tary buildup that shortens time horizons.
U.S. counterterrorism efforts should always favor develop­
ing local capability. It will not be American or NATO forces
that ultimately prevail over al Qaeda and the Taliban, but
Afghan forces. The same is true in other countries where terror­
ists threaten local society. We must look for ways to accelerate
the development of local capacity, including assigning area-
trained American volunteers to remain in high-threat areas for
long periods and to work directly with local forces.
The U.S. military should be willing to consider very differ­
ent structures. One would comprise our current armed forces,
trained and equipped to project conventional military power
and increasingly experienced in counterinsurgency. The other
would be a virtual organization that could assemble military
specialists in counterinsurgency and psychological warfare, with
AP IMAGES/BRENNAN LINSLEY
The sun sets over Camp Justice at Guantanamo Bay U.S. Naval Base, in Cuba.
The camp already feels like a ghost town. Just as the clock is running out on
the Bush administration, so, too, is it ticking for America’s six-year attempt
to try the so-called “worst of the worst” for war crimes.
W W W . R A N D . O R G
Major military incursions into
Pakistan would be a mistake.
The political risks outweigh any
temporary military gains.
volunteer civilians serving as political officers and development
agents, to meet specific missions.
Major military incursions into Pakistan would be a mistake.
The political risks outweigh any temporary military gains. An
invasion could provoke a negative reaction in Pakistan’s tribal
areas, further complicate the already precarious political situa­
tion, and galvanize new support for al Qaeda.
Talking to adversaries must remain a part of America’s strat­
egy. Dialogue is not an alternative to fighting, nor does it neces­
sarily end fighting. It is part of a strategy aimed at dissuading,
demoralizing, and dividing the enemy, while offering an exit for
the disillusioned—to reverse Clausewitz’s famous dictum, an
extension of war by other means.
We must look for ways to deflect vulnerable young men
from a trajectory that is destructive and self-destructive, without
alienating or stigmatizing any communities. Offering individual
terrorists an attractive way out of the terrorist orbit should be a
component of our counterterrorist strategy, despite the likely
low yield. This will require flexibility in the justice system.
While a law enforcement approach to terrorism may be prefer­
able to a military approach, strict adherence to the criminal
justice system should not get in the way of defeating the terrorist
movement.
The emphasis on homeland security also must be on sus­
tainability: efforts to impede recruitment to violence, security
measures that are built-in and do not hinder the economy, an
informed allocation of possibly declining security resources, and,
above all, the education and active engagement of the public.
We need to enhance the intelligence capabilities of local
police departments, training and linking them with federal
agencies and one another. Sharing information can be facilitated
by revising our antiquated classification and clearance process,
which was more suitable to the Cold War than it is to the more
fluid, fast-moving threat of terrorism.
We must seek security solutions that are both effective and
efficient. We cannot allow the terrorist threat to destroy our
economy or alter our society. Rebuilding America’s crumbling
infrastructure presents an opportunity to completely rethink
how we move people, goods, energy, and information to achieve
nonsecurity solutions to security problems. ■
R A N D R E V I E W / F A L L 2 0 0 8 17
 U.S. intelligence agencies have identified terrorist plots stem­
A BETTER DEAL
ming from the Afghanistan-Pakistan border region as perhaps
the single most important threat to the U.S. homeland. NATO’s
reputation is also at stake over its first-ever involvement in ground
AFGHANISTAN combat, and its credibility would be severely tarnished if it failed
to stabilize Afghanistan.
FINISH THE JOB There are more than 50,000 international troops in Afghan­
istan, along with more than 50,000 Afghan National Army
soldiers. The number of U.S. and NATO forces should rise by at
By Seth G. Jones
least 28,000 until indigenous soldiers can fill those ranks. This
will entail making difficult choices, such as redeploying some
Seth Jones is a RAND political scientist and an adjunct professor at
U.S. forces from Iraq to Afghanistan.
Georgetown University and the Naval Postgraduate School.
At the same time, the United States and its allies must
redouble their efforts to build the Afghan security forces, par­
ticularly the police. In most operations against al Qaeda, local
t is time for the United States to finish what it started when police forces have greater legitimacy and a better understand­

I it overthrew the Taliban in 2001. The United States and

NATO must now proceed swiftly on multiple fronts simul­
taneously. The allies should increase their forces in Afghanistan,
fortify Afghan security forces, support tribal groups, strengthen
local governance, and work with neighboring Pakistan to elimi­
nate the insurgent sanctuaries across the Afghan border.
ing of the environment than U.S. forces have. But the Afghan
National Police force is in disarray, is incompetent, and is almost
uniformly corrupt. Corruption is detrimental to the counter­
insurgency campaign because it diminishes the population’s
support for its leaders. Based on the low quality of the Afghan
police in 2001, when the Taliban regime was overthrown, police

Ali Akbar,
an Afghan
pomegranate
seller, arranges
his produce at
the World
Pomegranate
Fair in Kabul,
Afghanistan, on
November 20,
2008. Afghan
officials have
launched a mar­
keting campaign
for the fruit in
the hope that it
will give farmers
an alternative to
growing opium
poppies.

AP IMAGES/RAFIQ MAQBOOL

18 R A N D R E V I E W / F A L L 2 0 0 8 W W W . R A N D . O R G

The deteriorating situation and
local nature of the insurgency now
require Western support for local
tribes, subtribes, and clans to help
establish order and governance.
reform there will take at least a decade, or until 2011. Persistence
is essential to police reform.
In addition, security and stability in Afghanistan have his­
torically required a balance between top-down efforts to create a
central government and bottom-up efforts to secure local support.
Since 2001, the United States and the international community
have focused predominantly on top-down security efforts, includ­
ing the establishment of the Afghan National Police and Afghan
National Army. But the deteriorating situation and local nature
of the insurgency now require Western support for local tribes,
subtribes, and clans to help establish order and governance.
Indeed, the United States and its allies must sharply aug­
ment their efforts to improve the quality of local government,
particularly in rural regions. The poor security environment
has kept reconstruction and development efforts from reaching
outlying areas. The lack of roads, electricity, and water is a fore­
most concern of the population, especially in rural areas. The
counterinsurgency will be won or lost in the rural communities
of Afghanistan, not in urban centers such as Kabul. This means
that the counterinsurgency must find ways to reach rural com­
munities despite security concerns.
Failing to eliminate the insurgent sanctuaries in Pakistan
will cripple the efforts to stabilize and rebuild Afghanistan. Every
successful insurgency in Afghanistan since 1979 has enjoyed a
safe haven in Pakistan and assistance from individuals within the
Pakistani government, which must now be convinced to under­
mine the sanctuaries on its own soil.
There is room for hope in Afghanistan. Many Afghans
express optimism in the face of their country’s difficulties, and
most Afghans still oppose the Taliban and other insurgent groups.
But support for the U.S. presence is dwindling. The key is to fun­
nel sufficient resources and coordination through a narrowing
window of opportunity and to build Afghan capacity quickly. ■
W W W . R A N D . O R G
A BETTER DEAL
PAKISTAN
PUT INSTITUTIONS FIRST
By C. Christine Fair
Christine Fair is a RAND political scientist with expertise in South
Asian political and military affairs.
akistan is a crucial U.S. ally but is mired in instability
P and uncertainty, raising questions about its will and
capacity to stay engaged in the fight against terrorism.
Few Pakistanis embrace the fight as their own, and they increas­
ingly oppose military operations in the country’s Pashtun belt.
More troubling is the fact that many Pakistanis doubt that the
various militant groups ensconced on the frontier bordering
Afghanistan are threats to their national or personal security.
The Pakistani polity harbors suspicions about the United
States and its intentions. The bulk of the more than $10 billion
in U.S. assistance and reimbursements sent to Pakistan since
9/11 has focused on the military. Little has gone to ordinary
Pakistanis, and perilously few resources have been devoted to
strengthening Pakistan’s emaciated civilian institutions.
Discussions of U.S. aid cutoffs and conditions related to the
counterterrorism campaign are thus fraught with dangers. Paki­
stanis note that in the past, the United States has been most gener­
ous with military leaders but has cut off aid when civilian leadership
returns. This has fostered cynicism that the United States prefers a
militarily dominated Pakistan to a democratic one.
The task now before the United States is to use aid selec­
tively to encourage a military retreat from politics and a gradual
evolution of competent politicians. For U.S. assistance to be effi­
cacious, the United States will require partnerships with civilian
leaders dedicated to reform. It is important that the United
States reach out to all political parties, key civilian institutions,
and civil society groups while sustaining a working relationship
with the armed forces. The new U.S. president should view Paki­
stan’s civilian leaders as important partners in forging a secure
and prosperous Pakistan.
There is an urgent need to rewrite the terms of U.S. military
assistance to Pakistan. Weapons and programs that could serve
Pakistan’s strategic purposes against India should be contingent
upon demonstrable evidence of Pakistani alignment with U.S.
R A N D R E V I E W / F A L L 2 0 0 8 19
 Hundreds of
Pakistani lawyers
and workers of
opposition politi­
cal parties protest
in Rawalpindi,
Pakistan, on
November 3,
2008, to pressure
the government
to reinstate doz­
ens of judges,
including Iftikhar
Mohammad
Chaudhry, who
was fired by
former President
Pervez Musharraf.
AP IMAGES/ANJUM NAYEED

counterterrorism efforts. The United States should continue to
expand programs that enable Pakistan to fight terrorism more
effectively. At all levels, the United States must engage in a genuine
strategic dialogue with Pakistani military and civilian leaders.
Meanwhile, the United States should dramatically expand
its assistance to reform Pakistan’s civilian institutions, nota­
bly the judiciary, police, and law enforcement; to train large
numbers of politicians; and to support civil society institutions
such as those that monitor human rights, corruption, politi­
cal reconciliation, and human development. Education should
remain a priority, but educational initiatives should be sensitive
to Pakistani preferences, which may not involve secularization
of the curriculum.
The United States should
dramatically expand its assistance
to reform Pakistan’s civilian
institutions, notably the judiciary,
police, and law enforcement.
The United States has agreed to spend $750 million in
development funds in Pakistan’s Federally Administered Tribal
Areas along the Afghan border. But neither Washington nor
Islamabad has backed legal and political reforms for these areas.
It is unlikely that economic investments will bring residents of
these areas into mainstream society in the absence of a legal
framework consistent with Pakistan’s own constitution and
absent the functioning police, courts, and other basic services
that Pakistanis elsewhere enjoy.
Pakistanis need to be reassured that the United States is
seriously committed to securing a democratic Pakistan. The
United States should shift from supporting one person or party
toward supporting the key democratic institutions and processes
of this critical country.
However, without a Pakistani commitment to change, the
United States will be unable to help Pakistan transform and
stabilize itself. Should Pakistan be unwilling to reverse course
and to take decisive action against all militant groups active in
the country, Washington must be willing and ready to conclude
that Pakistan is an unsuitable recipient of U.S. generosity. And
this is a choice that Pakistan should have to make. ■

20 R A N D R E V I E W / F A L L 2 0 0 8 W W W . R A N D . O R G

A BETTER DEAL
IRAQ
OFFER A NEW VISION
By Nora Bensahel, Edward O’Connell, and David E. Thaler
Nora Bensahel is a RAND senior political scientist and an adjunct
professor at Georgetown University. Edward O’Connell is a RAND
senior analyst and co-leader of RAND’s Alternative Strategy
Initiative. David Thaler is a RAND senior analyst.
rogress has been made in Iraq on enhancing civilian
military forces, though one that is different in terms of missions,
force structure, size, and basing than that currently in play.
Violence in Iraq has diminished over the past year thanks
to several major contributing factors: Sunni reaction to al Qaeda
excesses (the Sunni “awakening”), a pullback of Shiite militias from
anti-Sunni violence and from confrontation with coalition forces,
a diminution in externally supplied armaments, and a temporary
increase in the number of U.S. forces (the “surge”) coupled with a
more effective use of Iraqi Army forces. Moving U.S. forces out of
military bases and into places such as Baghdad has also increased
their ability to monitor the safety and security of the population.
All these factors are subject to change. At reduced levels, U.S.
forces might not have sufficient troops on hand to protect the
population. Some members of the Sunni awakening could grow
disenchanted if they are not integrated into the security forces
as quickly as promised. The Shia cease-fires, always shaky, could
easily be withdrawn or ignored by rogue members. Corruption in
the Iraqi National Police and key ministries remains a problem.

P safety, implementing a counterinsurgency strategy, and

transferring authority over these matters to Iraqi lead­
ers, but there will be a continuing need for the United States to
evaluate these efforts and to make further adjustments. Promot­
ing U.S. interests in Iraq will require a continued role for U.S.
And potentially destabilizing activities in Iraq by its neighbors
continue to cause concern for security, both in Iraq and in the
broader region.
A coherent counterinsurgency transition strategy from coali­
tion to Iraqi security forces will need to be put in place. Such a

An Iraqi woman
wears traditional
dress for a
transfer-of­
authority cere­
mony in Hilla,
Iraq, near the
ruins of the
ancient city of
Babylon, on
October 23, 2008.
The U.S. relin­
quished control
of the southern
province of Babil,
handing security
responsibility to
the Iraqi govern­
ment. U.S. forces
will remain in
the area to assist
the Iraqis when
needed.

AP IMAGES/ALAA AL-MARJANI

W W W . R A N D . O R G R A N D R E V I E W / F A L L 2 0 0 8 21

America’s role in Iraq is in
transition. Local acceptance of
a U.S. presence will continue
to depend on its perceived
effectiveness.
strategy will, among other things, need to focus on protecting the
population, increasing the emphasis on law enforcement and non­
military approaches to security, providing essential social as well as
economic services, moving toward a detainee process that demon­
strates a commitment to human rights, and supporting a political
agenda that focuses on the role of not only the Iraqi government
but also the Iraqi public in national reconciliation efforts.
America’s role in Iraq is in transition. Local acceptance of a
U.S. presence will continue to depend on its perceived effective­
ness. Iraqi trust in the ability of indigenous security forces to
ensure safety and stability appears to be growing. And in terms of a
future relationship with the United States, Iraq does not yet speak
with one voice. The Kurds want a rock-solid partnership and U.S.
bases. Arab Shias and Sunnis are divided on this topic, but both
communities appear to know that they need some U.S. presence
for the foreseeable future—both to maintain a positive trend in
security and to continue building Iraq’s security forces.
The long-term intentions of the United States in Iraq and
in the region also remain in flux. The United States continues
to build base infrastructure at the same time that it debates exit
strategies, and this sends mixed signals to friends and foes alike.
Furthermore, U.S. partners in the Middle East remain unsure
of America’s vision for future regional security, particularly with
regard to Iran, but such a vision is of critical importance to the
long-term U.S.-Iraqi relationship.
The United States must offer its vision for Iraq and the region.
Despite positive signs of progress in Iraq, the ultimate outcome
there remains uncertain. Therefore, a long-term bilateral partner­
ship with Iraq will need to be robust enough to advance mutual
interests, flexible enough to respond to emerging political condi­
tions, and muted enough to assuage local and regional sensitivi­
ties. Moreover, the United States should encourage a multilateral
regional security framework centered on issues of broad interest,
such as disaster relief and border security—a framework in which
a moderate, growing Iraq can thrive. ■
22 R A N D R E V I E W / F A L L 2 0 0 8
A BETTER DEAL
IRAN
BUILD A CONSTRUCTIVE
RELATIONSHIP
By Keith Crane, James Dobbins, and Clifford Grammich
Keith Crane is a RAND economist. James Dobbins is director of
RAND’s International Security and Defense Policy Center. Clifford
Grammich is a RAND communications analyst and a research asso­
ciate of the Glenmary Research Center in Nashville, Tennessee.
he Iranian regime is likely to remain stable and resis­
T tant to external pressures for dramatic change in the
short term. However, Iranian societal conditions seem
conducive to a more constructive relationship with the United
States in the long term.
Political, demographic, and economic trends suggest that
Iran is likely to become more democratic and less obdurate over
time. Educational levels have increased dramatically. Citizens
vote and expect their government to be responsive to their con­
cerns. The 2009 election will provide Iranians an opportunity
to change their president. Information flows relatively freely, at
least over the Internet. The media engage in debates on a wide
range of policies. Incomes are rising, and consumer spending is
shifting toward patterns typical of more-developed countries.
More women are participating in the labor force.
Non-Persian ethnic groups account for half the country’s
population and are often strong proponents of expanding civil
liberties and the powers of elected officials. These groups are
likely to play a significant role in moving the country toward
greater democracy.
The Iranian government faces great pressure to generate
employment for the children of the 1980s population boom.
Iranian youth have become highly cynical, sometimes violently
angry, about prospects for jobs. Dissatisfaction with the state-
run economic system is growing.
The United States can foster Iranian tendencies and policies
that favor greater personal freedoms by communicating with the
Iranian government; encouraging more discussion among Irani­
ans about social, political, and economic issues; and sponsoring
more contacts and interactions between Iranians and Americans.
The U.S. government should fund educational and diplomatic
W W W . R A N D . O R G

AP IMAGES/HASAN SARBAKHSHIAN
An Iranian moneychanger eats his lunch as he displays bank notes in
Tehran, Iran, on October 30, 2008. The country has plunged into a storm
of recrimination, directed largely at President Mahmoud Ahmadinejad, as
falling oil prices have hurt the Iranian economy.
exchanges more generously, encourage U.S. officials to speak to
Iranian media, and expand U.S.-supported broadcasts in local
languages as a forum for discussion of major social issues.
The United States can also promote changes to liberalize
the Iranian economy, potentially strengthening the private sec­
tor and weakening the sway of the religious establishment. To
this end, the United States should not oppose Iran’s accession
to the World Trade Organization and should support efforts by
the International Monetary Fund and World Bank to encourage
better economic management in the country. The United States
should still maintain an embargo on gas liquefaction and gas-to­
liquids technologies as a bargaining chip until Iranian policies
become more congruent with U.S. interests.
There are greater similarities than differences in the values
held by the two peoples. Both Iranians and Americans place
high importance on family, religion, work, and service to oth­
ers, with few differences contributing to “civilizational clashes.”
The governments could turn to these shared values if and when
Tehran and Washington decide to normalize relations.
Iranians do have an imposing set of grievances against
the United States and vice versa. But Iran is more democratic
than Egypt and less fundamentalist than Saudi Arabia, two of
America’s most important allies in the region. It is time to apply
to Iran the same set of policies that won the Cold War, liberated
the Warsaw Pact, and reunited Europe: détente and contain­
ment, communication whenever possible, and confrontation
when necessary. It is time to negotiate with Iran, uncondition­
ally and comprehensively. ■
W W W . R A N D . O R G
A BETTER DEAL
TURKEY
STRIKE A BALANCE
By Angel Rabasa and F. Stephen Larrabee
Angel Rabasa is a RAND policy analyst with expertise in political Islam
and Southeast Asia. Stephen Larrabee holds the RAND Distinguished
Chair in European Security.
stable democratic Turkey is strongly in the American
A interest and would contribute to enhancing stability
in three areas of increasing strategic importance to the
United States: the Middle East, the Caucasus, and Central Asia.
The best way for U.S. officials to ensure that a stable Turkey
remains closely anchored to the West is to continue to nudge
the country toward strengthening the kind of political and eco­
nomic reforms that would help to ease the growing polarization
in Turkish society that has been evident in recent years.
Specifically, the United States should support those sec­
tors in Turkish society that are working to reconcile Islam
with democracy. The obvious example is the ruling Justice and
Development Party, which received a renewed mandate in the
July 2007 parliamentary elections. The ability of this party with
Islamic roots to operate within the framework of a secular dem­
ocratic system, while respecting the boundaries between religion
and state, refutes the argument that Islam cannot be reconciled
with modern secular democracy. On the other hand, if the
experiment fails, it could lead to greater polarization along a
secular-Islamic axis, further reducing the middle ground needed
to build a moderate Muslim bulwark to contain the spread of
radicalized Islam.
In addition, the United States needs to deal more resolutely
with the terrorist attacks against Turkish territory conducted
by the Kurdistan Workers’ Party (PKK) from sanctuaries in
northern Iraq. In Turkish eyes, the PKK issue is the litmus test
of the value of the U.S.-Turkish security relationship. The U.S.
reluctance to help Turkey respond to Kurdish terrorism has been
the primary cause of the strained relations between Turkey and
America and of the dramatic rise in anti-American sentiment in
Turkey since 2004.
The closer military and intelligence cooperation with
Ankara against the PKK since Prime Minister Recep Tayyip
R A N D R E V I E W / F A L L 2 0 0 8 23
 Turkish students
wearing Islamic-
style headscarves
gather in front
of the main cam­
pus of Istanbul
University on
October 23, 2008,
to protest a
headscarf ban at
Turkish universi­
ties. Government
attempts to lift
the ban have
escalated ten­
sions between
the secular oppo­
sition and the
ruling, Islamic-
rooted Justice
and Development
Party.
AP IMAGES/IBRAHIM USTA

Erdoğan’s visit to Washington in November 2007 has helped to
defuse some of the mistrust that has built up since—and to a
large degree as a consequence of—the U.S.-led invasion of Iraq.
But this cooperation needs to be followed up by other concrete
steps. In particular, the United States should put greater pres­
sure on the Kurdistan Regional Government in northern Iraq to
crack down on the PKK.
However, the PKK cannot be defeated by military means
alone. While a tough counterterrorist program is important, it
must be combined with Turkish social and economic reforms
that address the root causes of the Kurdish grievances. The
United States should also encourage Turkey to enter into a direct
dialogue with the Kurdistan Regional Government, whose
cooperation is essential to reduce the PKK threat.
The new U.S. administration also needs to ensure that the
Armenian genocide resolution periodically introduced in the
The United States should support
those sectors in Turkish society
that are working to reconcile Islam
with democracy.
U.S. Congress by the Armenian lobby does not lead to new
strains in relations with Ankara. In 2007, the Bush administra­
tion shelved a genocide resolution at the last second, narrowly
averting a serious crisis with Ankara. But the resolution is likely
to be reintroduced and to remain a potential source of discord.
Passage of such a resolution would do nothing to foster
Turkish-Armenian reconciliation. If anything, it would stimu­
late a nationalist backlash in Turkey and make reconciliation
more difficult. The new U.S. president thus needs to work
closely with the congressional leadership to keep the genocide
issue from causing a new crisis that could derail the important
improvement in U.S.-Turkish relations since late 2007.
Finally, the United States should support Turkey’s ambition
to join the European Union (EU). Turkey’s integration into the
EU would strengthen Turkey’s Western orientation and would
rebut the claim that the West—especially Europe—is innately
hostile to Muslims.
Conversely, rejection of Turkey’s candidacy could provoke
an anti-Western backlash, strengthening those forces in Turkey
that want to weaken its ties to the West. The United States
should support Turkish membership diplomatically behind the
scenes but avoid overt pressure on the EU, which could backfire
and damage Turkey’s chances of obtaining EU membership over
the long run. ■

24 R A N D R E V I E W / F A L L 2 0 0 8 W W W . R A N D . O R G
 their weapons. Beyond deterrence, U.S. and allied leaders will
A BETTER DEAL
want military capabilities that offer far greater assurance that
the use of nuclear weapons by such adversaries can be prevented,
which would mean physically blocking an attack irrespective
PROLIFERATION of the intentions and actions of the adversary. This will require
forces that can locate, track, and destroy nuclear weapons and
PREVENT NUCLEAR USE,
their delivery vehicles before and, above all, after they are
DETER TERRORIST ACQUISITION
launched. Accordingly, greater emphasis should be placed on
developing and fielding more-effective defenses against theater-
range missiles that could deliver such weapons.
By David Ochmanek
At the same time that the United States should look
beyond deterrence against nuclear-armed regional adversaries,
David Ochmanek, a RAND defense analyst, served as deputy assistant
deterrence will still have its place, particularly with regard to
secretary of defense for strategy from 1993 to 1995.
their relations with terrorist groups. As my RAND colleague
Brian Michael Jenkins has pointed out, it is unlikely that any
nuclear-weapons state would turn over part of its nuclear arsenal
hen North Korea tested its first nuclear device to terrorist control, because the benefits to the state would be

W on October 9, 2006, the rather unimpressive

explosive yield of half a kiloton belied the larger
threat: the fact that an impoverished nation could develop and
test a nuclear device in the face of opposition from the United
uncertain, and the risks would be enormous.
However, we can further influence the calculations of these
states. We must maintain the deterrent principles that states
will be held accountable for the actions of terrorists when there
States and all the neighboring states in northeast Asia. If North is evidence of collaboration, that retaliation remains an element
Korea, Iran, and other regional adversaries cannot be convinced of U.S. deterrence strategy, and that in a post-nuclear terrorist
to forgo nuclear weapons, the consequences for U.S. and allied environment, the pressures for U.S. action will be immense. In
security could be profound. such an event, the standards of evidence may be lowered. Gov­
It is important to distinguish between nuclear-armed ernments with secret nuclear programs may have little time to
regional adversaries and larger, more powerful nuclear-armed prove their innocence. Absolute proof of a connection may not
states, such as Russia, China, and India. The former are likely be prerequisite to action. ■
to behave differently, and in some cases more dangerously, than
the latter. Regional adversaries are those countries whose leaders
The day after
pursue policies at odds with those of the United States and its North Korea per­
allies, whose actions run counter to broadly accepted norms of formed its first
nuclear weapons
state behavior, and whose conventional military forces are not test on October 9,
formidable. In a conflict, adversaries of this class could regard 2006, detonating
an underground
the use of nuclear weapons as an attractive option—or at least blast in a “great
less unattractive than withholding use—in the face of vastly leap forward”
that defied inter­
superior U.S. conventional forces. national warn­
An enemy leader facing the prospect of his or her regime’s ings, a North
Korean soldier
collapse may perceive the country to be in a use-or-lose situa­ throws rocks at
tion. Attempts to deter such an enemy’s use of nuclear weapons a photographer
traveling by boat
by threatening retaliation (a mainstay of Cold War military across the border
strategy) could be problematic in many plausible conflict scenar­ with China.

ios involving nuclear-armed regional adversaries, for the simple

reason that adversary leaders may not believe that they will be
any worse off for having used nuclear weapons than if they were
to forgo their use.
U.S. and allied leaders will not be satisfied with simply try­
ing to deter the use of nuclear weapons by regional adversaries.
Deterrence would depend on convincing adversaries not to use
AP IMAGES/GREG BAKER

W W W . R A N D . O R G R A N D R E V I E W / F A L L 2 0 0 8 25
 A BETTER DEAL
ECONOMY
KEEP AMERICA INNOVATIVE
By Titus Galama and James Hosek
Titus Galama is a RAND management scientist. Economist James
Hosek is editor of the RAND Journal of Economics and a professor
at the Pardee RAND Graduate School.
conomic issues played a big role in the presidential elec­
E tion, but most of the economic debate revolved around
reactive measures, such as bailing out Wall Street,
stemming home foreclosures, or drilling for oil. The United
States needs a longer-term economic vision that will make the
most of the nation’s strengths in science and technology.
The vision should be based on an objective assessment of
where U.S. science and technology stand today. Is the United
States faltering as Europe strengthens its scientific capabilities
and emerging countries create theirs, and is the United States
likely to suffer from shortages of scientists and engineers in its
workforce? Lacking an objective assessment of these trends, U.S.
leaders run the risk of making ad hoc decisions when shaping
policies to promote innovation and competitiveness.
There is enormous potential to harness the power of Yankee
ingenuity. Despite perceptions that the United States is losing its
competitive edge as a result of globalization and perceived dis­
investment at home, our assessment is that the nation remains
the world’s leader in science and technology, accounting for 40
percent of the world’s spending on research and development,
employing 70 percent of the world’s Nobel Prize winners, and
being home to three-quarters of the world’s top 40 universities.
U.S. investments in research and development have been
growing at a steady clip (see the figure) and at faster rates
than those in Europe and Japan. China is investing heav­
ily in these areas, but it
does not yet account for
a large share of world
There is enormous innovation and scientific
potential to output, which continues
to be dominated by the
harness the power United States, Europe,
of Yankee ingenuity. and Japan.
26 R A N D R E V I E W / F A L L 2 0 0 8
U.S. Investments in Research and Development Have
Grown Steadily
$300
Billions of U.S. dollars
Development
$200 Applied research
Basic research
$100
$0
1953 1963 1973 1983 1993 2003
Year
SOURCE: U.S. Competitiveness in Science and Technology, 2008.
NOTES: All three research categories include federally funded, industry-funded, and
nonprofit-funded research. Development refers to the exploitation of research discoveries.
Applied research is conducted for government-driven, commercial-driven, or client-driven
purposes. Basic, or “pure,” research is carried out to expand knowledge with no direct or
immediate benefit.
The United States has built and maintained its lead with
help from an inflow of foreign students in the sciences and of
foreign scientists and engineers. Retaining this inflow of foreign-
born talent to the United States is essential. America should wel­
come the immigration and the indefinite stay of highly skilled
foreign labor.
Regrettably, a recent reduction in the cap on H1-B skilled
immigrant visas could reduce the inflow of foreign science and
engineering workers. Curtailing the supply of these workers
could lead U.S. firms to outsource more of their research and
development to foreign countries and to locate new facilities
overseas. Rather than protecting jobs, this policy could lead to
reduced investment and employment at home.
The United States cannot afford to be complacent. Other
nations are building scientific capacity and are rapidly educating
their populations in science and technology. While the United
States has benefited and is likely to continue to benefit from the
globalization of science and technology, globalization is a pow­
erful force of change with an uncertain outcome.
To position itself best for the global economy, America
should continue to improve K–12 education in general and sci­
ence and technology education in particular. America should
increase its capacity to learn from science centers in Europe,
Japan, China, India, and other countries. New research also
raises the possibility of placing more emphasis on early child­
hood development to raise education attainment overall.
Turning an economic vision into reality depends on sound
policymaking rooted in a thorough understanding of the issues.
The U.S. government should fund an independent body to
evaluate the country’s science and technology performance, to
monitor the condition of the science and engineering workforce
over the long term, and to assess the likely outcomes of complex
forces such as globalization. ■
W W W . R A N D . O R G
 tial. Another option—fuel from a synthetic mixture of biomass
A BETTER DEAL
and liquefied coal, combined with carbon capture and storage—
could also greatly reduce carbon emissions.
But dramatic further progress in renewable energy tech­
ENERGY nologies is required over the next two decades if the United
States hopes to produce a significant percentage of the nation’s
PURSUE A RANGE OF SOLUTIONS electricity and motor vehicle fuel from renewable sources at a
reasonable cost to consumers. An especially important concern
is the future availability and cost of a sustainably grown biomass
By Michael Toman
supply, given the importance of biomass feedstock for renewable
liquid fuels, coal-biomass liquid blends, and electricity.
RAND economist Michael Toman specializes in climate change
None of these fossil-based or renewable fuel options alone
mitigation, sustainable development, energy markets, energy security,
is capable of making a major dent in demand for conventional
and environmental policy design.
petroleum-based fuels over the next ten or more years to enhance
energy security. Nor will pursuing all these options simultane­
ously suffice. Increased energy efficiency (for example, more
nstable oil prices, rising concerns about energy secu­ carpooling) and greater fuel conservation (for example, less

U rity, and growing worries about greenhouse gases that

cause global warming have raised interest in greater use
of both renewable energy and unconventional fossil fuels. But
energy policies that enhance energy security might not reduce
driving) also need to be part of a broad portfolio of technology
initiatives and policy instruments to promote energy diversity
while reducing greenhouse gas emissions. ■

emissions of greenhouse gases (particularly carbon dioxide, the

most prevalent greenhouse gas), and policies that reduce green­
house gas emissions might not enhance energy security. The new
Increased energy efficiency and
U.S. president will need to pursue a combination of options that
can address several environmental and economic trade-offs. greater fuel conservation need to
Two unconventional fossil fuels—synthetic crude oil derived
be part of a broad portfolio.
from oil sands deposits in Canada, and liquid fuels produced
from coal—hold significant economic promise over the next 20
years. Extensively tapping these fuels would help to keep world
oil prices lower than otherwise, thus reducing the cost of oil that
we do continue to import.
But both fossil fuels also raise environmental concerns.
While some involve risks to local lands and water supplies, a
primary issue is that both fuels emit greater amounts of car­
bon dioxide than do conventional petroleum products. These
emissions could be reduced to levels comparable to those of
conventional petroleum by investing in equipment to capture
the carbon dioxide and to pump it into long-term underground
storage. The technical and economic feasibility of large-scale
carbon capture and storage is currently under study but has not
yet been demonstrated. And even with success in such carbon
dioxide storage, these fuels would not put the country on a path
to very low greenhouse gas emissions to protect the climate over
the longer term. AP IMAGES/SKYFUEL, JACK DEMPSEY

Substituting renewable energy for fossil fuels would also
help hold down the price of crude oil over time, and it would
help reduce emissions of carbon dioxide. Among the renewable
energy options, biomass and wind power offer the most poten­
A new solar power system is unveiled in Arvada, Colorado, on October 6,
2008. The system uses a reflective film instead of heavy, fragile, expen­
sive curved glass mirrors. This technology, developed with the National
Renewable Energy Laboratory, helps reduce the cost of the solar field by
25 percent compared with previous generation systems.

W W W . R A N D . O R G R A N D R E V I E W / F A L L 2 0 0 8 27

A BETTER DEAL
EDUCATION
STANDARDIZE THE GOAL,
difficult for certain students and, at the same time, that the empha­
CUSTOMIZE THE STRATEGY
sis on having every student attain “proficiency” has led to a cur­
By Brian M. Stecher and Laura S. Hamilton
Brian Stecher is a RAND social scientist. Laura Hamilton is a
RAND behavioral scientist. Both specialize in education assessment
and accountability.
ome time after the U.S. Congress reconvenes in Febru­
S ary 2009, the debate will resume over reauthorization
of the No Child Left Behind Act of 2001. The law has
had positive and negative effects that ought to be considered
during the reauthorization debate.
The law created a testing and accountability system that man­
dates potentially severe interventions for schools and districts that
receive federal Title I funding and that repeatedly fail to make “ade­
quate yearly progress.” Title I funding is set aside for schools and dis­
tricts with high percentages of students from low-income families.
We studied the effects of the law in California, Georgia, and
Pennsylvania. Among the positive results, school districts are align­
ing local curricula with state standards and assessments, using test
data to make decisions about curriculum and instruction, and
providing extra support to low-performing students. Educators
AP IMAGES/DAMIAN DOVARGANES
First-grade students perform an experiment at Las Palmitas Elementary
School in the Coachella Valley Unified School District in Thermal, California.
The district is considered one of the worst in the state and faces sanctions
under the federal No Child Left Behind Act.
28 R A N D R E V I E W / F A L L 2 0 0 8
across the three states say the test data facilitate their ability to meet
individual students’ learning needs. Teachers report improvements
in academic rigor, instruction, and the focus on student learning.
However, administrators are more positive about the effects
than are teachers. Teachers are more likely to question the validity
of state test results. Some teachers worry that the standards are too
riculum that is not challenging enough for high-achieving students.
A majority of teachers do not believe that the state accountability
systems are beneficial for students. Moreover, teachers report a vari­
ety of ways in which they have narrowed their instruction to focus
on tested material, to the exclusion of topics and subject areas that
are not included in state tests but that nonetheless would generally
be viewed as critical to a well-rounded education.
No Child Left Behind has led to distinctive accountability
systems in each state: different standards, different assessments, and
different assistance strategies. In some cases, changes may be needed
to reduce or to eliminate these differences—for example, to make
the definition of “proficiency” in reading and mathematics similar
across all states or to equalize the content standards across states.
In other cases, it may be wise to relax rules to give states greater
flexibility. School improvement efforts might be more effective if
they were responsive to local conditions. Rather than imposing a
fixed set of choices that apply when schools fail to make progress
for a given number of years, the improvement efforts could be
customized to address the specific causes of failure and the local
capacity to ameliorate them. Such efforts should include resources
to help teachers offer high-quality instruction while avoiding the
temptation to focus exclusively on tested content.
Additional changes to the law may be warranted to promote
better measurement of outcomes. Moving away from a system
that focuses on whether a student performs above or below the
“proficient” level and toward a system that measures progress
at all points along the achievement distribution would provide
better information about how well schools are performing and
could substantially increase teachers’ support for the system.
There is a further lesson for school-based accountability systems.
Although educators have become comfortable with the underlying
theory of accountability, they are not comfortable when implemen­
tation of the theory seems to clash with their local situations.
Such conflicts can occur when the local curriculum does not
match the state content standards, when the proficient level seems
unattainable for many students, or when an entire school is judged
against targets that both seem unattainable and fail to reflect the
breadth of learning the school is trying to promote. A good way to
start bridging these gaps between theory and practice would be to
engage educators themselves, to a greater extent than has been done
in the past, in the reauthorization of No Child Left Behind. ■
W W W . R A N D . O R G
 A BETTER DEAL
HEALTH
USE “COMPARE” FOR BETTER
POLICYMAKING
By Elizabeth A. McGlynn and Jeffrey Wasserman
Elizabeth McGlynn is the associate director of RAND Health.
Jeffrey Wasserman is a RAND senior policy researcher specializing
in health care reform.
M ost politicians agree that the U.S. health care system is
in crisis. Its ills are legion.
Health care spending is approaching 15 percent of U.S.
gross domestic product, diminishing the profitability of Ameri­
can companies and crowding out other private and public
expenditures. Ninety percent of Americans say that health care
costs are a big or very big problem for the U.S. economy.
Also, there are serious quality problems. U.S. adults receive
just over half of recommended care. Nearly 100,000 Americans
die each year in hospitals from medical errors.
About 46 million Americans are uninsured. Among the
insured, the availability of coverage is declining and the generos­
ity of benefits is eroding.
Waste is rampant. About a third of U.S. health care spend­
ing produces no value. Examples include unnecessary services,
duplication of tests, lost opportunities for early intervention, and
inefficient delivery of care.
Americans aren’t getting what they’re paying for. Compared
with people in other developed countries, U.S. adults have lower life
expectancies, and U.S. children have higher infant mortality rates.
Most vexing of all, the complexity and fragmentation of the
U.S. health care system has generated multiple competing demands
from a wide variety of stakeholders, raising significant barriers to
reform. It is nearly impossible to have a constructive, objective dia­
logue about the relative merits of different proposed solutions.
To advance the national dialogue, RAND Health is
launching the COMPARE initiative. COMPARE stands for
Comprehensive Assessment of Reform Efforts. At the heart of
COMPARE is an online policy options “dashboard”—or a
spreadsheet in the form of a control panel—that indicates the
effects of policy changes on the performance of the U.S. health
care system. The dashboard summarizes the status quo and
W W W . R A N D . O R G
AP IMAGES/MATT YORK
With no health insurance offered through their jobs, and no money to
purchase coverage on their own, the family of John and Delynn Gibel, of
Senecaville, Ohio, faced $30,000 in medical bills in 2008. The only option,
said John, was to declare bankruptcy.
the intended and unintended effects of different policy options
across ten dimensions.
For example, the dashboard shows the known effects of
an individual insurance coverage mandate, an employer man­
date, or a Medicaid expansion on such outcomes as spending,
consumer financial risk, health, and coverage. The COMPARE
Web site also provides detailed information on the expected
effects of many other policy options, of a range of legislative
and other proposals to modify the health care system, and of
the status quo.
RAND hopes COMPARE will serve as a valuable resource
for the media, for legislative and executive staff at the state and
federal levels, and for other public- and private-sector policy-
makers. RAND will not use the tool to design its own proposal,
but others will be able to use the information to compare the
pros and cons of various proposals.
Ultimately, users must make their own judgments about
the wisdom of health policy proposals based on the trade-offs
involved, the preferred priorities, and the expected magnitudes
of changes, as suggested by the evidence to date. In some cases,
there is no solid evidence with which to estimate the likely
effects of reforms, leaving ample room for judgment calls. But
for the first time, there is a strong foundation from which people
with different value systems can discuss options based on a
shared set of facts. ■
Waste is rampant. About a third of
U.S. health care spending produces
no value.
R A N D R E V I E W / F A L L 2 0 0 8 29

A BETTER DEAL
Related Reading
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Getting Back on Track in Afghanistan, Seth G.
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How Terrorist Groups End: Lessons for Counter­
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In the Graveyard of Empires: America’s War in
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Unconquerable Nation, Volume 2: Governing
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30 R A N D R E V I E W / F A L L
Energy
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Energy Use, Michael Toman, James Griffin, Robert
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“Who Is at Greatest Risk for Receiving Poor-
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1147–1156, Steven M. Asch, Eve A. Kerr, Joan
Keesey, John L. Adams, Claude M. Setodji, Shaista
Malik, Elizabeth A. McGlynn.
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www.randcompare.org/
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“American and Iranian Public Opinion: The Quest
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of press time (Web only):
www.rand.org/pubs/reprints/RP1261/
Iran’s Political, Demographic, and Economic
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Martini, RAND/MG-693-AF, 2008, 156 pp., ISBN
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www.rand.org/pubs/monographs/MG693/
Negotiating with Iran, James Dobbins, RAND/
CT-293, testimony presented before the House
Committee on Oversight and Government
Reform, Subcommittee on National Security
and Foreign Affairs on November 7, 2007, 10 pp.
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www.rand.org/pubs/monographs/MG642/
Counterinsurgency in Iraq (2003–2006): RAND
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Pirnie, Edward O’Connell, RAND/MG-595/3-OSD,
2 0 0 8
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www.rand.org/pubs/monographs/MG595.3/
Future U.S. Security Relationships with Iraq
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Jennifer D. P. Moroney, Frederic Wehrey, Obaid
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www.rand.org/pubs/monographs/MG681/
“Security for the Iraqis: The Forgotten Prerequi­
site for Getting It Right,” United Press Interna­
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“Too Soon to Judge the Surge,” San Diego
Union-Tribune, August 29, 2008, Nora Bensahel.
M i l i t a r y I n t e r ve n t i o n s
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www.rand.org/pubs/conf_proceedings/CF251/
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0-8330-4302-3, $21. As of press time:
www.rand.org/pubs/monographs/MG694/
“Turkey’s Broadening Crisis,” International Herald
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W W W . R A N D . O R G
New Books from the RAND Corporation
STRATEGIC ANALYSIS AT HOME AND ABROAD
Pacific Currents
The Responses of U.S. Allies and Security Partners in East Asia
to China’s Rise
Evan S. Medeiros, Keith Crane, Eric Heginbotham, Norman D. Levin,
Julia F. Lowell, Angel Rabasa, Somi Seong
The inexorable rise of China’s economic, military, and diplomatic
power has prompted worries that it is nudging aside U.S. influence
in the Asia-Pacific region. The authors examined six U.S. allies and
partners—Australia, Japan, the Philippines, Singapore, South Korea,
and Thailand—assessing the responses in each nation to China’s rise
and the implications for U.S. regional security interests.
308 pp. • color charts • 2008 • $52 (paperback) •
ISBN 978-0-8330-4464-8
Moving Los Angeles
Short-Term Policy Options for Improving Transportation
Paul Sorensen, Martin Wachs, Endy Y. Min, Aaron Kofner, Liisa
Ecola, Mark Hanson, Allison Yoh, Thomas Light, James Griffin
“The report provides a storehouse of information that will assist
transportation planners and policymakers for many years to come.”
—Richard W. Willson, Ph.D., FAICP, professor and chair,
Department of Urban and Regional Planning, California State
Polytechnic University, Pomona
The authors recommend strategies for reducing congestion in
Los Angeles County that could be implemented and produce sig­
nificant improvements within about five years. Recommendations
proffered in the book are tailored to the L.A. region, but they are
of value for leaders in other cities who are interested in strategies to
reduce congestion.
This summary volume includes the full volume and extensive
appendixes on compact disc.
78 pp. (summary) • 638 pp. on compact disc • 2008 • $35 (paperback) •
ISBN 978-0-8330-4555-3
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1776 Main Street • P.O. Box 2138 • Santa Monica, CA 90407-2138
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THE HISTORICAL PERSPECTIVE
RAND and the Information Evolution
A History in Essays and Vignettes
Willis H. Ware
The RAND Corporation played a pivotal role in the develop­
ment of computer science. RAND’s accomplishments included
important advances in hardware and software as well as analytic
techniques that exploited the speed and power of computers. This
memoir includes dozens of fascinating photographs and vignettes
that reveal the collegial, creative, and often playful spirit in which
this groundbreaking research was conducted at RAND.
228 pp. • 2008 • $34 (paperback) • ISBN 978-0-8330-4513-3
After the War
Nation-Building from FDR to George W. Bush
James Dobbins, Michele A. Poole, Austin Long, Benjamin Runkle
“Jim Dobbins and his coauthors do a terrific job of summarizing
the approaches of several administrations to addressing the issues
associated with nation-building.”
—David Rothkopf, author of Running the World: The Inside
Story of the National Security Council and the Architects of
American Power
By combining theory and evidence on the eight significant nation-
building operations since World War II—in Germany, Japan,
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authors draw conclusions about the influence of decisionmaking
style and structure on American nation-building.
188 pp. • 2008 • $25 (paperback) • ISBN 978-0-8330-4181-4
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